CFA Practice Question

There are 266 practice questions for this study session.

CFA Practice Question

A portfolio is comprised of the following three bonds:

Bond | Maturity | Coupon | Duration | Weight
Bond A | 22 | 6% | 9.1 | 20%
Bond B | 17 | 7% | 7.5 | 50%
Bond C | 8 | 8% | 3.3 | 30%

What is the change in portfolio value if the yields increase by 80 basis points for all three bonds?
A. -2.25%
B. 2.25%
C. -5.25%
Explanation: %Δ Portfolio Value = wA DA ΔrA + wB DB ΔrB + wC DC ΔrC = 0.2 * -9.1 * 0.008 + 0.5 * -7.5 * 0.008 + 0.3 * -3.3 * 0.008 = -5.25%

User Contributed Comments 2

User Comment
sarasyed5 why are the values in negative?
welchd because yields are increasing
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